The most recent FCPA and anticorruption enforcement developments involving the People’s Republic of China (PRC) are summarized below. Thanks, as always, to Squire Sanders’ Shanghai Office for monitoring these enforcement actions.
1. New law or regulation
(1) The Regulation on Punishment for Improper Issuance of Subsidies and Allowances (the “Regulation”) was jointly promulgated by the Ministry of Human Resources and Social Security, the Ministry of Finance, and the National Audit Office on July 12, 2013, which took effect on August 1, 2013. The Regulation, which aims to tighten the allowance supervision in China, applies to all civil servants nationwide and to certain other persons who work in public institutions. According to the Regulation, all officials responsible for misappropriating state-owned funds or funds for special use and granting them to individuals in the name of allowances will be subject to disciplinary sanctions, demoted, or removed from their respective positions.
Local level (Beijing & Shanghai): No developments.
Communist Party Rules: No developments.
2. Upcoming law or regulation
3. Government Action
(1) On August 6, 2013, four judges of the Higher People’s Court of Shanghai Municipality, i.e., Zhao Minghua (“Zhao”), Chen Xueming (“Chen”), Ni Zhengwen (“Ni”), and Wang Guojun (“Wang”), were given disciplinary sanctions and expelled from the Communist Party. The four judges were caught patronizing prostitutes on a video clip posted on Internet by a whistleblower. The video showed that the four judges as well as a senior executive of a construction company cavorted with women in a nightclub’s VIP room. Reportedly, the whistle-blower Ni Guopei began investigating Zhao’s behavior from the year of 2010, after he suspected Zhao had inappropriately intervened in a civil case in 2009 that lead to a court ruling that he considered “unfair” and resulted in his losing millions of yuan.
(2) On August 6, 2013, Jiang Qinghan (“Jiang”), the former Deputy President of Wenzhou Radio and Television Media Group, Zhejiang Province, was sentenced to 12 years in prison by the People’s Court of Wencheng County, Wenzhou City, with confiscation of personal assets of RMB 200,000 (USD 32,682). Jiang was found guilty during his term from 1998 to 2012 for taking bribes, property, and kickbacks totaling RMB 1.47 million (USD 240,215), EUR 5,000 (USD 6,604), and USD 5,000 from several IT companies seeking government procurement contracts. The bribers identified by procurators included Hangzhou Xizi Optoelectronics Network Co., Ltd., Shenzhen Dongyan Broadband Science and Technology Co., Ltd., and Zhejiang Guanglian Information Internet Co., Ltd.
(3) On August 8, 2013, the official website of the Ministry of Supervision published a report that Liu Tienan (“Liu”), the former Deputy Chief of National Development and Reform Commission and former Director of National Energy Administration, was expelled from the Communist Party of China (“CPC”) and removed from his position for violating laws, regulations and disciplinary rules. Liu reportedly accepted bribes and gifts for taking advantage of his position. In addition, Liu also is alleged to have provided illegal benefits for his relatives’ business operation and keeping two mistresses.
(4) On August 14, 2013, Han Guoxiang (“Han”), the former Deputy Leader in Comprehensive Team of National Afforestation Commission Office, was sentenced by the Higher People’s Court of Beijing Municipality to 20 years imprisonment for taking bribes and embezzling. Han was sentenced to 11 years in prison in September 2010 for seeking bribes totaling RMB 600,000 (USD 98,080) for the purchase of personal apartment. Two months later, Han was charged again with accepting bribes totaling RMB 10.29 million (USD 1.68 million) from local forestry bureaus and various entities in a nationwide competition of model gardening cities. Reportedly, Han established with a partner three companies to solicit and embezzle from local government departments that had been designated as model gardening cities. Han’s partner, Li Li, was sentenced to 13 years in prison for embezzlement.
(5) On August 19, 2013, Li Zhizhen (“Li”), the former Director and Party Secretary of Civil Affairs Bureau of Guangzhou City, Guangdong Province, was sentenced to 13 years in prison with confiscation of personal assets in the amount of RMB 500,000 (USD 81,734) by the Intermediate People’s Court of SHANGHAI/22652.2 Guangzhou City. Li allegedly took advantage of his position during his term from 1994 to 2011, accepting cash totaling over RMB 3.6 million (USD 588,484) and gifts including valuable watches on many occasions, and seeking illegal benefits in the form of business arrangements and job promotions for those who had paid him bribes.
(6) During August 22 to August 26, 2013, Bo Xilai (“Bo”), the former chief leader of the CPC, was on trial in the Intermediate People’s Court of Jinan City, Shandong Province on charges of taking bribes, embezzling funds, and abusing power. The trial was broadcast live through the court’s official Sina micro-blog. The prosecutors demanded a heavy sentence for Bo, and Bo denied all the charges against him. The judgment will be announced in a later stage according to the court.
(7) The official website of the Ministry of Supervision on August 27 reported that four senior executives of China National Petroleum Corporation (“CNPC”), the biggest oil company in China, were under formal investigation for suspected severe breaches of discipline. The four executives are Wang Yongchun, the Deputy General Manager of CNPC and General Manager of Daqing Oilfield Limited Company, Li Hualin, the Deputy General Manager of CNPC, Ran Xinquan, the Vice President of Petro China Company Ltd., a subsidiary of CNPC (“PetroChina”), and Wang Daofu, the Chief Geologist of PetroChina. PetroChina, as a company listed on the Shanghai Stock Exchange, lost market value amounting to RMB 29.2 billion (USD 4.77 billion) over three days, apparently due at least in part to the publicity. The reason for the investigation has not yet been disclosed.
(1) On August 15, 2013, the official website of the Supreme People’s Procuratorate reported that prosecutors all over the country have investigated 8,048 persons suspected involving 5,706 malfeasance cases in the first half of 2013, and a total of 250 officials at or above county level have been investigated.
5. China-related FCPA Action